Celsius Lawyers Claim Users Relinquished their Crypto When they Signed Up

Celsius is already beginning to spark controversial claims over retail users crypto ownership. Lawyers handling the bankruptcy filings for Celsius referenced the bankrupt lenders Terms of Service (ToS) Agreement when they put forth as an argument that users transferred their crypto ownership title and legal rights to the lending platform when they deposited funds into Celsius earn and borrow platform.

According to documents from the chapter 11 proceedings, Kirkland & Ellis Law Firm handling the bankruptcy for the lending platform is arguing that “Celsius has the legal right and discretion to pledge, use, sell or rehypothercate any cryptocurrency deposited on it’s platform” because the more then 1.5 million users actively using the earn and borrow platform transferred their ownership title to Celsius when signing up for the platform.

Did Users Really Give Up Right to Ownership?

A review of Celsius Earn and Borrow Terms of Service (ToS) clearly states depositing funds into the Earn and Borrow Platform gives full control over these assets to the platform –

“Title to Coins is transferred to Celsius, and Celsius is entitled to use, sell, pledge and rehypothecate these coins.”

The company provided a clear defense to the question during the presentation.

Nash pointed out that Celsius Terms of Service (ToS) outlined that depositing coins into the earn program transferred the title of these coins to the platform. This allowed the platform to make use of, promote, pledge, and reassume coins as desired. The same holds true for the borrowing program, users could choose from a variety of loan products based on the loan-to-value ratio (LTV) of the pledged collateral.

It appears, the only retail product on the network that enables customers to retain coin titles was the custody program launched in April 2022.